Abbott Laboratories has agreed to pay $670 million to settle lawsuits alleging the company hid risks that its infant formula for premature babies can cause a deadly bowel disease. According to reports from NDTV Profit, the settlement resolves claims involving approximately 2,000 infants who allege the formula can cause necrotizing enterocolitis (NEC), a bowel disease that can cause intestinal tissue of premature babies to inflame and die. The settlement specifically covers claims related to Abbott's Similac premature formula, which the company continues to sell despite ongoing litigation. As per the latest SEC filing, the company chose settlement instead of further appeal or paying approximately $600 million judgment plus interest in the Gill case.
Despite the ongoing legal challenges, Abbott Laboratories demonstrated robust financial performance in Q2 2026, with 4.8% year-over-year sales increase and a 100 basis point rise in adjusted gross margin to 58.0%, as reported by Bloomberg. The growth was primarily fueled by the company's acquisition of Exact Sciences for cancer diagnostics and innovative product launches. This strong financial performance provides a solid foundation for the company to manage the substantial legal settlement costs while continuing to invest in growth initiatives.
With the settlement agreement, approximately 1,700 lawsuits involving claims on behalf of 12,700 infants remain unresolved, as reported by NDTV Profit. Abbott stated it is not admitting liability in the settlement, maintaining its position that there is nothing in current research to back up the allegations it faces in court. The company continues to sell its preemie formula under the popular Similac brand, though it had previously indicated it may have to stop selling the specialized product due to the ongoing litigation. After these deals, approximately 1,700 lawsuits remain pending involving 12,700 individual infants across federal and state courts.
One of the lawsuits covered by the settlement includes the Gill case in which a St. Louis jury determined Abbott should pay $495 million to the family of an infant allegedly injured by its formula, according to NDTV Profit. Abbott's appeal to the Missouri Court of Appeals was denied, contributing to the company's decision to settle the case. The company continues to challenge questionable claims and emphasizes the consensus among health experts that preterm formulas do not cause NEC, supported by medical authorities and regulatory agencies. Abbott maintains that these agreements represent a compromise of disputed claims and not an admission of liability, citing favorable rulings in MDL bellwether cases and court decisions applying the learned intermediary doctrine.
The settlement represents a significant financial commitment for Abbott Laboratories, but the company's strong Q2 2026 performance and continued growth trajectory suggest it remains well-positioned to manage the legal costs while maintaining its market leadership in neonatal care. The company's focus on innovative products and strategic acquisitions, including the Exact Sciences deal, positions it for continued growth despite the ongoing litigation. Abbott's emphasis on the critical role of preterm formulas in neonatal care, supported by medical authorities, suggests confidence in the long-term viability of its infant formula business.
